Does Your Small Business Need a New Credit Card This Year?

Are business credit cards on your radar? Perhaps they should be. If you’re self-employed, own a small business, or even just work a side hustle as a ride-hailing driver, you’re allowed to open one.

They’re pretty popular, especially since they are more accessible than other forms of funding to start a business (such as loans). Research from Forbes Advisor found that for 2023, 25.4% of survey respondents who opened a business credit card did so because they could not access other conventional financing. With this in mind, let’s take a closer look at business credit cards, and how to tell if one is right for you.

Does your business have a lot of bills?

Some small businesses have a lot of supplies to source and bills to pay — if you own a small cafe, for example, you likely have to pay rent on your space, cover utility bills, and buy food and other supplies. But if you’re a freelance writer, you probably don’t have a ton of bills, other than perhaps annual software licenses or a new computer every few years. Consider the expenses you pay on behalf of your business — a business credit card can give you the chance to earn rewards on them.

Do you struggle with keeping personal and business expenses separate?

I get it — you’ve got a busy life, and sometimes it’s hard to remember what you bought for your business and what you bought for yourself, especially if you’re the kind of person who likes hanging out at Staples for fun (no judgment here).

Unfortunately, mixing business and personal expenses can make things more difficult when it’s tax time and you’re scrambling to find records of everything you bought for the business last year ahead of meeting with your accountant. A business credit card can make your life a lot simpler, as you’ll already know which card to use when you’re making yet another Staples run or placing an Amazon order.

Business credit cards have sweet perks…

I mentioned rewards above, so let’s take a closer look at what perks you could enjoy with a business credit card. The best business credit cards offer a slew of benefits you might really like, such as cellphone protection, bonus rewards in useful categories (like shipping or office supply stores), and big welcome bonuses. Plus, you’ll get to earn cash back, points, or miles on your spending. And some of these cards even come without annual fees.

Also, a business credit card gives your business the chance to build its own credit score, separate from your personal score. Having a good business credit score can make it easier to qualify for loans in the future, which might really come in handy if you’re dreaming of someday expanding your operations.

…but so do personal credit cards

You don’t have to open a business credit card account to get great benefits, even if you’re eligible to do so. To simplify your life and have even more card options, you might elect to open a new personal credit card (or choose one of your existing ones) to become your “business” credit card.

Don’t use the chosen card for personal expenses, and instead put bills for your business on it, like your domain name renewal for your website, your health insurance premiums, and your supplies. This way, you’ll be able to keep your business expenses separate for an easier time filing your tax return, and you can still benefit from the perks of credit cards, like cash back and purchase protections.

Ultimately, the choice is yours. Full disclosure, I haven’t opened a business credit card, despite becoming a full-time freelancer/small business owner over a year ago. I may do so in the future, but as a writer and editor, my business expenses are pretty low and it just hasn’t felt necessary for me yet. But it might be a good move for you.

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